German Investor Sentiment Falls on EU-U.S. Trade Deal Fallout

(MENAFN) Investor sentiment in Germany took a sharper-than-expected hit in August, data released Tuesday revealed, driven by disillusionment over the newly struck EU-U.S. trade agreement and sluggish economic performance in the second quarter.

The ZEW, a top German economic research institute, reported its economic sentiment index plunged to 34.7 in August, down sharply from 52.7 in July. The previous month had coincided with the announcement of a framework deal between the United States and the European Union to impose a 15 percent import tariff on most EU goods.

"Financial market experts are disappointed by the announced EU-U.S. trade deal," ZEW President Achim Wambach said in a statement.

Wambach attributed the decline in confidence to Germany’s 0.1 percent economic contraction in the second quarter, which came after U.S. demand slowed following a previous spike in pre-tariff buying. He noted that expectations had notably deteriorated for the chemicals and pharmaceuticals sectors, while the mechanical engineering, metals, and automotive industries also encountered significant challenges.

The institute also highlighted a sharp deterioration in Germany’s current economic situation index, which fell to -68.6 in August from -59.5 in July, signaling a worsening outlook for Europe’s largest economy.

Across the eurozone, the ZEW’s economic sentiment index dropped to 25.1 in August from 36.1 in July, missing market expectations of 28.1 and reflecting growing pessimism among financial market experts. Meanwhile, the euro area’s current economic situation index declined to -31.2 from -24.2 over the same period.

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